Daily Digest: April 1st, 2020

Global LNG Demand to Rise 6% in 2020: WoodMac

Global LNG demand will grow by 6% year on year to 371mn mt (505bn m³) in 2020, Wood Mackenzie has forecast, while warning that its numbers will need constant revision as the coronavirus (Covid-19) crisis intensifies.

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The Big Picture:

• The LNG market is still contending with the same factors that caused oversupply last year – namely production growth, weak Northeast Asian demand and an increasingly saturated European market.

• Gas demand in China, the world's biggest gas importer, is expected to rise by 4-6% this year, compared with a 10% growth in 2019. Its LNG demand is seen rising 6.6% yr/yr to 65mn mt (88.4bn m³).

BP Shaves 25% off 2020 Capex

BP has slashed its capital expenditure plan for 2020 by 25% to $12bn in response to the Covid-19 pandemic and the market downturn, it announced in a statement.

The Big Picture:

• Production in 2020 will be 70,000 boe/d lower because of the cutbacks, relating to the company's US onshore oil and gas business BPX Energy.

• The company's downstream segment will be affected by the "significant and growing decline" in fuel demand, it warned.

McDermott Lands Indian Gas for ONGC

US engineering, procurement and construction firm McDermott International has achieved early first gas at India's Oil and Natural Gas Corporation's (ONGC) Block 98/2 offshore in the Krishna Godavari Basin, it said.

The Big Picture:

• "Production from a deepwater well in less than 14 months is an outstanding achievement for the deepwater exploration and production industry", the company said.
  

• A US court has approved McDermott's debt restructuring plan as it goes through the 'Chapter 11' bankruptcy avoidance process.

Jera's City Gas JV Begins Gas Ops in Ohgishima

Ohgishima City Gas Supply has begun commercial operation of a city gas production and supply facility in the Ohgishima district of Kawasaki City, it said in a statement.

The Big Picture:

• Ohgishima City Gas Supply is a joint venture comprising Jera, JXTG Nippon Oil & Energy Corp, and Osaka Gas.

• Jera said it will use this city gas mainly as fuel for the Shinagawa power plant, while JXTG and Osaka Gas will use it mainly for city gas retailing.

Hoegh LNG to Supply Cypriot FSRU

Oslo-based LNG vessel operator Hoegh LNG has applied for an LNG infrastructure, ownership, operations and development licence in Cyprus, it said.

The Big Picture:

• Hoegh LNG's plan, if the licence approved, is to supply a floating storage and regasification unit (FSRU) for a Cypriot LNG import project. In December, Cypriot authorities awarded a contract to a Chinese-led consortium to construct the LNG terminal at a cost of $323mn.

• The LNG project is backed by financiers and is aimed at providing Cyprus with cleaner and lower-cost electricity.

 UK Energy Demand off 13% on Lockdown: Report

A day after the UK government imposed a lockdown that all but stopped public movement, energy demand was down 13% across the day (March 25) according to research from Cornwall Insight.

The Big Picture:

• This could have implications for power supplies, it said.

• "Low demand means there is less space to operate larger synchronous generators. This can affect system inertia and rate of change of frequency – how quickly the system responds to a change of conditions."

PGNiG Starts Using Small-Scale LNG Capacity at Klaipeda

Poland's PGNiG has become the sole user of a small-scale LNG reloading station at the Klaipeda LNG terminal in Lithuania, it said.

The Big Picture:

• Following a competitive tender, PGNiG signed a five-year contract with the facility's operator Klaipedos Nafta (KN) in November, which came into force on April 1.

• PGNiG will now be able to access Baltic Sea small-scale LNG markets while helping it to deliver LNG supplies to customers in northeast Poland, it said.

Oz Cooper Keeps Output Guidance Unchanged

Australian explorer Cooper Energy March 31 said guidance for the total production for the 12 months to June 30 (FY2020) is unchanged from that announced in February.

The Big Picture:

• The company said it has a number of growth projects at various stages of maturity which will supply gas to south-east Australia and “therefore their pursuit is expected to be unaffected by the recent decline of crude oil prices”.

• “The commencement of gas sales from Sole is forecast to trigger and underpin the anticipated production and financial growth,” it said.